Big spending Hollywood is facing its own disaster movie. DVD movie sales have fallen 25 per cent since 2006 and digital content, which was expected to fill the gap of falling DVD sales, has seen consumer interest dwindle.

DVDs were the most important revenue stream to Hollywood and the film industry, according to research by media group IHS Screen Digest.

However, with DVD sales falling, buying films online was expected to be the next cash generator for Hollywood.

Sales of DVDs generated more than $20billion annually at their peak for
the industry and the decrease in sales has left the studios desperate
for new ways to make revenue.

3D movies: Films such as Pirates of the Caribbean 4 in 3D make studios extra money as the tickets are more expensive than traditional movies

There were high expectations for
digital downloads to take-off, but after a strong start by the market
leader, Apple’s iTunes and the launch of other digital providers, sales
growth has slowed.

Dan Cryan, author of the report, told the Financial Times: ‘The
retail model that has been so successful with DVD is not going to
replicate itself digitally.

‘What we’re seeing in the US and
internationally is a huge surge in digital retail to start off with but
then it flattens out quite quickly. If the studios are still expecting
digital retail to save their bacon they’re in for a rude surprise.’

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Hollywood
remains optimistic about the digital film market with many executives
hoping that a cloud-based service, which would allow consumer to store
digital content remotely, will boost digital distribution.

Apple is currently working on a cloud service and continues to be the world
market leader for selling digital films with a 55 per cent market share
of all global online movie transactions.

The report has also revealed that cinema goers’ interest in 3D movies has cooled in recent months.

The
proportion of the public going to 3D movies has slipped from its peak
18 months ago. Tickets for 3D movies are more expensive than a standard
film and studio executives will be worried to see general admissions
down.

However, despite the slowdown of 3D movie goers,
Transformers 3: Dark of the Moon recorded a record $415m
internationally in its opening weekend this month.